Iran pushes for further oil cut

[dipsydoodle]

Source: BBC News - 16.08 GMT 15th.

Iran is to urge the oil-exporters' group Opec to agree another cut in production to boost the price of oil, a top Iranian oil official has said.

It will call for a cut of between 1m and 1.5m barrels a day when Opec, which made a similar cut in October, meets in Cairo later this month.

The price of oil has fallen recently as demand declines amid the worsening global economic situation.

Iran, the world's fourth-largest oil producer, is viewed as a price hawk.

Iran's Opec governor, Mohammad Ali Khatibi, told Iranian state TV that talks were also under way with non-Opec crude oil producers to reduce output.

Read more: http://news.bbc.co.uk/1/hi/business/7731317.stm

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Broadly speaking non Opec means Russia.

[Lucky Luciano]

1. Tough shit Iran...

You leveraged your economy to depend on $100+ oil....No doubt you have started heavy spending based on anticipating revenues for years to come with $100+ oil...now that that may not come to fruition, it may break you. Not problem. Suck it up....like the rest of us.

[dipsydoodle]

2. They don't blow their income

like the Saudis etc.

[ohio2007]

5. Saudi Arabia is also going through the same "oil crises". They can afford to hold on a few months

longer then Iran or Venezuela before domestic pressure starts to simmer.

[ohio2007]

3. oil below $50 bbl. The mullahs are so screwed. They can always pray global warming is forgotten

and people increase their carbon footprint

/sarc

[NickB79]

4. It costs Iran $90/barrel to produce new oil reserves

They are actually losing money on any new oil they drill now. Older wells that have been operating for many years are cheaper, but they are not going to be able to maintain their economies on $55/barrel oil anymore. The cheap oil is gone.

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=115x175745

Before anyone gets a warm fuzzy feeling about seeing Iran's economy in tatters, remember one thing. They aren't investing in new oil production. They aren't drilling new fields anymore, not in any appreciable numbers. Neither are the Russians, the Saudis, the Kuwaitis, or the Venezuelans. If we can revive the world economy in the next year or two, the price of oil will again skyrocket as supplies fall short of demand. Obama's call for a green industrial revolution will take many years to implement, extending well into his 2nd term if not beyond.

Enjoy the cheap gas now while you can.

[Lucky Luciano]

6. I tend to disagree...

While it is clear that the price of oil went from being anti-correlated to the markets to correlated in a very short time, I doubt that the price will blast over $100 any time soon. I think it is clear that there was a frenzy of speculators out there who were caught holding the bag when the serious deleveraging got started. Now that hedge funds, et al have been forced to seriously deleverage, they can no longer hold nearly as many contracts of CL1 (oil) and they become forced sellers. Before we went in and wrecked Iraq, the price of oil was $25 - $30...and look what has happened afterwards...a total mess. I grant you that the exploding emerging market economies such as Brazil (Petrobras has found a lot of offshore oil though good technology is needed to get at a lot of it), China, and India should cause that amount to maybe even DOUBLE when the economy is good. So perhaps in a good economy, $50 - $60 should be a normal price. We are in a lousy economy...so oil should head back to a mean of $40. That is my prediction anyway. Nobody (brokers for the hedgies that is) will allow the kinds of leverage for people who pushed the prices way over $100. Not gonna happen. Not in this environment.

With all that said, the silver lining in all of this is that with oil so expensive since 2005, there has been a significant amount of R&D that has already been bought. So, that knowledge will be used to extract more oil - knowledge and technology that never would have been developed had the price not gotten so high. This technology has increased proven reserves even if prices are a bit lower.

Now it is up to us to continue to work extra hard to develop alternative energy further. Cheaper oil should NOT make us complacent - it should be seen as a "do-over." Get it right this time!